NZ market doesn’t budge after PM announces shock resignation

Neither New Zealand’s market nor the dollar barely budged after prime minister Jacinda Ardern made the shocking announcement that she would be resigning from her role next month.

Thursday, January 19th 2023, 6:06PM

by BusinessDesk

Ardern was visibly emotional as she made the announcement that she wouldn’t seek re-election and also revealed that the general election will be held on Oct 14 – earlier than many expected.

The S&P/NZX 50 index fell 35 points, or 0.3%, to 11,885.64. Turnover was $91.3 million.

Harbour Asset Management portfolio manager Shane Solly said the domestic market had taken the PM’s resignation news “in its stride” this afternoon because it was more focused on key economic data points coming up next week.

“Changing government always creates some question marks,” he said. “But we have an election this year, so it’ll be a very interesting election and with possibly quite significant changes.”

It wasn’t just the out-of-the-blue PM announcement that made the headlines today, as a flurry of corporate news also hit the market from a wide range of sectors.

Cancer diagnostics firm Pacific Edge fell 3.9% to 50 cents after it told the market today that its test volumes had risen by 36% in the three months to December, with the medical company processing a total of 7,768 tests.

AoFrio, formerly known as Wellington Drive Technologies, reported $74.3m in revenue for the full financial year that ended Dec 31, up 15.7% from a year earlier. AoFrio's shares were flat at 11.8 cents each.

Smartpay’s shares jumped more than 8% earlier this morning after it provided the market with strong revenue growth figures, which jumped by 85% in the three months to Dec 31..The IT service management company ended the day up 3.2% to $1.31.

Auckland hospitality provider Savor rose 7.6% to 42.5 cents after it said in a trading update that it had experienced some of its strongest trading ever in the final months of last year. The strong trading saw Savor post revenue for December of $6.8m – the highest in the group’s history.

Michael Hill International said it had “another record result” in the first half of its 2023 financial year, with its NZ segment seeing a nearly 14% jump in revenue.

The jewellery retailer said it now expected earnings before interest and taxes in the 2023 half-year to be between $52m and $55m – up from $51.6m in the first half of 2022.

Michael Hill was up 0.8% to $1.24.

It was A2 Milk that had dragged down the market today, Solly said, thanks to the news of China’s fall in birth rates being much higher than people expected.

The company was down 2% to $7.39 by early evening. The milk company has been having a good run on the index this month and Solly said it might have to “work a bit harder” to continue getting China – its biggest customer – to keep buying the same amount of stock.

Dunedin-based industrial automation company Scott Technology announced it had secured several new international contracts – including one with Costco in the US. The total value of the contracts was not revealed, but the firm said they were in addition to the $190m of work carried through from 2022.

Scott Technology ended the day up 7.8% to $2.75.

On the money

On the currency front, the NZ dollar was similarly undisturbed by the PM’s news.

The kiwi dollar had soared up to the 65 cents mark in the early hours of the morning NZ time but slipped back down to the mid 64 cents by midday.

It remained largely unchanged after the big announcement and Electus Financial director Mike Houlahan told BusinessDesk that currency markets tended not to “really react” to politics – especially political news from countries that use the MMP voting system.

“Both Labour governments and National governments are relatively centrist, so you don't get a wall of deviation in terms of implemented policy,” he said.

“It doesn't really trouble them a lot unless you get something real crazy going on. But they’re not being disrespectful."

The NZ dollar was trading at 64.27 US cents at 5pm in Wellington, down slightly from 64.45 US cents yesterday.

Tags: Market Close